Drop in value and lower pound entice local buyers.
SINCE February this year, more than half of the international buyers who have been scrutinising properties in London have been Asians, says a British developer who is here in Kuala Lumpur to promote its apartment project.
Berkeley Homes (Capital) plc operations director Pier Clanford says that while Europeans, especially the Italians, have historically been keen purchasers, he is increasingly seeing more Asians since the early part of this year. The Russians and the Middle Easterners are the other interested groups.
Berkeley Homes is part of the Berkeley Group Holdings plc, one of the largest developers in Britain. Besides Berkeley Homes, the group also has the St James and St George groups in its stable.
Clanford says the group’s preference is for central London or southeast suburbs of the British capital.
“Asians are buying to take advantage of the drop in the property value and the cheaper British pound (RM5.70 to £1 compared with RM7 in September 2008),” he says.
Excluding central London, some areas have dropped by 25%, says Clanford. In cities like Manchester and Birmingham, the drop could be greater with slower recovery.
Since the beginning of this year, the group has been promoting its properties in Malaysia, Singapore and Hong Kong. Several of the projects were also marketed in India. Because of this interest on the part of Malaysians as seen in these earlier promotions since the downturn in 2008, the group will be bringing in more projects in the next several months to Kuala Lumpur. Previously, they only went to Hong Kong and Singapore.
Clanford says other projects include Imperial Wharf (SW6), Merchant Square by Paddington Station, Beaufort Park (NW9) and Royal Arsenal in Woolwich (SE18).
“We are trying to get our specifications and pricing right. What we have discovered over the months is Malaysians’ interest for 2-bedroom units of between 700 and 800 sq ft with the price band between £150,000 and £350,000,” he says.
“The entry level has been lowered quite a bit with the current downturn,” says Clanford. Besides gaining advantage from the cheaper pound and the drop in price value, the prices offered here are also lower than those in Britain.
(It is a lot more expensive for developers to promote the properties in Britain than it is in Asia. Also, as properties were sold at a certain price in London before the downturn, developers are unable to drop their prices. However, they have that option when they bring their projects here).
Clanford says Malaysians who opt for 2-bedroom units buy for their own use and for their children studying there.
Hong Kong buyers, who generally prefer one-bedroom units, have a higher appetite for risks while Singaporean buyers prefer 2- and 3-bedroom units, and go for more upmarket projects.
On the whole, the Asian buyers’ preference are for projects which are near the public transport system, universities and easy access to amenities like shops.
Caspian Wharf, the project being showcased here, comprises 550 units. Eighty-five units are put up for sale in the region. Prices range from £170,000 to £550,000.
Its second phase will be offered for sale in Kuala Lumpur in November. The project will be ready for the 2012 London Olympics.
International property consultants King Sturge who is accompanying Clanford on this Asian tour says London’s property market continues to be depressed compared with the Singapore and Australian markets.
James Talbot, a partner in the company’s residential investment and development consultancy section, says the Singapore market is driven by local consumption with some international investors while the Australian market is faring well.
“Britain’s property sector continues to be depressed, which is why we feel this is the time to buy. It is a discount of 40% to 45% if we compare the current prices today with the 2007 prices when the property market was at its peak. There is now more room for negotiation,” he says.